Who Pays for Newspapers?

Both Felix Salmon and Matt Yglesias take me to task for my Financial Page assertion that online readers of newspapers have essentially been living off the benefits of an infrastructure that’s paid for by the papers’ print subscribers. They both argue, in Felix’s words, that “subscribers are more expensive, not less expensive, than online readers,” because producing a physical newspaper costs much more than a subscription does. Since the money print subscribers pay newspapers is less than it costs the newspapers to put out a print edition, they argue, it’s a mistake to say that online readers are being subsidized by print readers.

This seems to me to miss the basic point, which is that print readers “pay” not just by shelling out for subscriptions, but also by looking at print ads, which are vastly more expensive than online ads. Today, the amount of revenue that newspapers generate from their print editions is many multiples of what they get from their online sites—even though their online sites often have many more readers. Without the revenue generated by the print editions, the newspapers’ newsgathering operations—the fruits of which online readers enjoy for free—would have to be vastly smaller. In other words, just as I argued, print subscribers are effectively subsidizing online readers.

Now, you can argue, as Yglesias does, that the problem newspapers are having online “isn’t that the readers won’t pay, it’s that the advertisers won’t pay.” Or you can argue that advertisers shouldn’t, as they do, value customers who pay for newspapers above those who don’t. But neither of these contentions changes the situation, which is that online readers have, for years now, been reaping the benefits of work that only exists because of print subscriptions, and that as print newspapers disappear, so too will much of that work, unless something dramatic changes.

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